Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
An invoice of RM 1500 is offered cash discount terms of 5/10, 3/20, n/60What is 5/10 stand for?
 A 5 divided with 10 B 5% will be offered if the buyer or customer manage to pay the bills within 10 days C 5% will be offered if the buyer or customer manage to pay the bills within 20 days D No discount offered
Explanation:

Detailed explanation-1: -The basic formula for cash discount can be expressed as CD = P*R, which stands for cash discount = purchase price * discount rate.

Detailed explanation-2: -The formula to calculate the discount rate is: Discount % = (Discount/List Price) × 100.

Detailed explanation-3: -Trade discount are general discount allowed to every customer to promote the sales. Its a reduction to the published price of a product.

Detailed explanation-4: -In accounting, there are two different ways that cash discounts can be recorded in the books: the net method and the gross method. The net method treats sales revenue as the net amount after the given discount, and any discounts that the buyer doesn’t take are recorded as interest revenue.

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